Accomodationists versus structuralists: some empirical evidence from Spain (1987-98)

The main purpose of the study is to test empirically the theoretical controversy between the so-called "accommodationist" and "structuralist" approaches in the context of the endogenous money hypothesis. The former is usually summarised as stating that the determination of the money supply is essentially both credit-driven and demand-determined. The information used for empirical testing corresponds to monetary time series data from the Spanish economy covering the period 1987-1998. It thus encompasses the period which stretches from the complete liberalisation of commercial banks deposit and lending rates in Spain up to the passing over of monetary policy management from the Bank of Spain to the European Central Bank. Direct Granger causality tests are then run between the monetary base, various money multipliers (using the M1, M2 and M3 definitions) and bank lending to the non-bank private sector for the period considered. Overall the results lend strong support for the structuralist approach since Granger causality is found to run predominantly from bank lending to the monetary base (and thus banks´ reserves) and the various money multipliers.